Pivot Based Trading (1:2 risk reward ratio) risk less profit more

Hi All,

I want to introduce a very simple way of trading.

Everyone is aware of Pivots in charts.

It is very difficult to track real time pivot on intraday charts during trading hours.

After surfing lot of site and struggling, i found the way to calculate pivot based on previous day values.

After the pivot is calculated the resistance and support levels are found.

Resistance and support are of two types (using normal method and using fibonacci method.)

You can use any one of them. Both gives good result. Stick to any one method.

The system is as follows, please give your feedback and suggestions.

1. Firstly log to http:// pivottrading.110mb. com (remove spaces)
2. Enter previous day high, low and close for any scrip.
3. Pivot is an important value here.
4. Look at the price of stock/underlying at 10:25-10:30 am. (half hour after market opens)
5. For Resistance and support values, you can choose normal values or fibonacci values. Both give good results. It depends upon you which suits you.
6. There are various scenarios which can occur.
-----1. The price is below the Pivot but above S1.
--------In this scenario, you should buy the stock/underlying above Pivot (If price reaches above Pivot) and short sell below S1(if the prcies goes below S1).
----2. The price is above Pivot but below R1.
--------In this scenario, you should buy the stock/underlying above R1 (if the price reaches above R1) and short sell below Pivot(if the price goes below Pivot).
----3. The price is very near to pivot (+/- 0.02%)
--------In this scenario, you should buy the stock/underlying above R1 (if the price reaches above R1) and short sell below S1(if the price reaches below S1).
----4. The price is between R1 and R2.
--------In this scenario, you should buy the stock/underlying above R2 (if the price reaches above R2) and short sell below Pivot(if the price reaches below Pivot). the important here is not to sell below R1. You must sell below Pivot.
----5. The price is between S1 and S2.
--------In this scenario, you should buy the stock/underlying above Pivot (if the price reaches above Pivot) and short sell below S2(if the price reaches below S2). The important here is not to buy above S1, buy only above pivot.
----6. The price is between S2 and S3.
--------Same rule applies as rule 5. Buy above pivot, short sell below S3.
----7. The price is between R2 and R3.
--------Same rule applies as rule 4. Buy above R3, short sell below Pivot.

Keep the profit, stoploss as below

Profit : 0.75% - 1%
Stoploss : 0.5%

Please please do reply with your suggestions.
I hope many of you already knows this.
No theory can become 99% successful without people's suggestions.
Do reply with your valuable comments.

 

Most traders know this, but I believe is will be a valuable less for you:

No trading method can become 99% successful. Period.

Mark

 

Take a look at Mark Fisher's book, "The Logical Trader".

 

Thanks for the book.

 

My suggestion is to let us know what this has to do with options.

 

Technincal analysis, pivots, and all others are nice tools but they're just tools they are by no means set in stone or dead reliable.

You shouldbe happy if they're right 51% of the time on the long run